AQA A-Level Accounting: Verification of accounting records (7127) – Revision Notes

For full explanations and longer worked examples, use the study guide. The recording rules these checks rely on are in the double entry model.

These notes cover section 3.4, Verification of accounting records, of the AQA A-level Accounting (7127) specification, version 1.1 (October 2026), for A-level exams from June 2019 onwards. The course is untiered, and section 3.4 is examined on Paper 1. Course hub: AQA A-level Accounting. Tick off the topic on the printable checklist, then try the practice questions.

3.4 at a glance

Four verification techniques: trial balance, bank reconciliation statement, sales ledger control account, purchases ledger control account. Errors are corrected through the general journal and, where the trial balance did not agree, a suspense account. You must also show the effect of errors on profit and the statement of financial position, redraft statements, and judge the benefits and limitations of each technique.

The ten error types

Revealed by trial balance	Not revealed by trial balance
Addition (casting)	Commission (wrong account, right type)
Partial omission (one side missing)	Complete reversal (debit and credit swapped)
Transposition (one entry only)	Compensating (errors cancel)
Unequal posting (different amounts)	Omission (whole transaction missing)
	Original entry (wrong figure in book of prime entry)
	Principle (wrong class of account)

Transposition clue: wages of £5 670 posted to the wages account as £5 760 (cash book correct) makes the debit side £90 too large. 90 ÷ 9 = 10. A difference divisible by 9 points to a transposition.

Must-know distinctions

• Transposition vs original entry. Digits reversed in one posting only: revealed. Wrong figure in the book of prime entry, used for both sides: not revealed.
• Omission vs partial omission. Whole transaction missing: not revealed. One side missing: revealed.
• Commission vs principle. Wrong account of the right class (one customer for another): commission. Wrong class (an asset as an expense): principle. Principle errors usually change profit; commission errors usually do not.
• Complete reversal. The correcting entry is twice the amount: once to cancel, once to record correctly.
• Unpresented cheques vs outstanding lodgements. Unpresented cheques are payments in the cash book not yet on the statement. Outstanding lodgements are receipts in the cash book not yet on the statement.
• Memorandum control accounts. In 7127 the individual customer and supplier accounts hold the double entry. The control account is a separate check built from totals.

Method: suspense and journal

1. Enter the trial balance difference in suspense on the side with the smaller total, so totals agree.
2. For each error, write the journal entry (debit first, then credit, then a narrative).
3. Only errors that caused the imbalance touch suspense.
4. Post the suspense entries to the suspense account. It must close to nil.

Journal layout reminder. Rent received of £640 was entered in the cash book but not posted to the rent received account (partial omission, so credits are £640 short):

                               Dr £     Cr £
Suspense                        640
  Rent received                          640
Rent received not posted to the ledger

Profit rises by £640 once corrected. Revenue and income corrections go on the credit side; expense corrections that reduce an overstated expense also go on the credit side.

Complete reversal reminder: a cheque of £530 received from M Doyle was debited to M Doyle and credited to bank. Correction: Dr Bank £1 060, Cr M Doyle £1 060.

Method: corrected profit and redrafting

Draft profit for the year
Add:  errors that understated profit
Less: errors that overstated profit
Corrected profit for the year

Mini example: draft profit £30 000. Accrued wages of £1 200 were omitted; office equipment of £450 was debited to office expenses (ignore depreciation).

Draft profit                  30 000
Less: accrued wages           (1 200)
Add:  equipment capitalised      450
Corrected profit              29 250

Then redraft the statement of financial position: accruals +£1 200, non-current assets +£450, capital uses £29 250. Check net assets = corrected closing capital.

Error	Profit	Statement of financial position
Expense debited to a non-current asset	Overstated	Non-current assets overstated
Non-current asset debited to an expense	Understated	Non-current assets understated
Accrued expense omitted	Overstated	Current liabilities understated
Prepayment omitted	Understated	Current assets understated
Closing inventory overvalued	Overstated	Current assets overstated
Irrecoverable debt not written off	Overstated	Trade receivables overstated
Commission between two customers	No effect	No effect on totals

Method: control accounts

Sales ledger control: debit	Sales ledger control: credit
Balance b/d (debit)	Balance b/d (credit)
Credit sales	Receipts
Dishonoured cheques	Discount allowed
Interest charged on overdue accounts	Sales returns
Refunds to customers	Irrecoverable debts
Balance c/d (credit)	Contra with purchases ledger
	Balance c/d (debit)

The purchases ledger control account mirrors it: payments, discount received, purchases returns and contras on the debit side; credit purchases and interest charged by suppliers on the credit side; debit balances carried down on the credit side.

Never include: cash sales, cash purchases, provisions for doubtful debts.

Mini example: debit balance b/d £12 400; credit sales £18 900; interest charged £160; receipts £15 300; discount allowed £410; sales returns £870; contra £500. Debit side totals £31 460, so the closing debit balance is £14 380.

Method: bank reconciliation

1. Update the cash book: standing orders, direct debits, bank charges, dishonoured cheques (all credit side); credit transfers and interest received (debit side); correct cash book errors.
2. Start from the bank statement balance.
3. Add outstanding lodgements. Subtract unpresented cheques.
4. Result = updated cash book balance. This figure goes on the statement of financial position.

Watch overdrafts: an overdraft on the bank statement is a debit balance from the bank’s view and a credit balance in the cash book. Treat it as a negative number throughout.

Benefits and limitations

Technique	Main benefit	Main limitation
Trial balance	Proves debit total = credit total	Misses the six errors above
Control accounts	Locates an error to one ledger; quick totals; fraud check	Misses original entry, omission and commission within the ledger
Bank reconciliation	Finds unrecorded bank items and cash book or bank errors	Checks only the bank column; misses mispostings to the wrong expense

Quick self-test

1. Name the four errors that a trial balance reveals.
2. Wages of £5 670 were posted to the wages account as £5 760. The cash book was correct. Name the error and state the trial balance difference.
3. Draft profit is £18 400. Closing inventory was overstated by £600, and wages of £350 were debited to drawings. Calculate corrected profit.
4. Name two items that never appear in a sales ledger control account.
5. A contra of £720 is made. State the entries in the control accounts.
6. The cash book shows a favourable balance of £2 100. Unpresented cheques total £450 and an outstanding lodgement is £300. Calculate the bank statement balance.
7. Trial balance debits are £64 300 and credits £63 850. State the suspense balance.
8. A computer costing £1 200 was debited to office expenses. State the effect on profit and on the statement of financial position (ignore depreciation).
9. Give two errors that a bank reconciliation would not reveal.
10. How can a credit balance arise in the sales ledger?
11. A credit sale of £2 090 was entered in the sales journal as £2 900. Name the error and say whether the trial balance reveals it.
12. A purchases ledger control account has debit balances to carry down of £85. On which side of the account is the £85 entered before totalling?

Answers

1. Addition, partial omission, transposition, unequal posting.
2. Transposition; debit side £90 too large.
3. 18 400 − 600 − 350 = £17 450.
4. Any two: cash sales, provision for doubtful debts, cash purchases.
5. Debit purchases ledger control £720; credit sales ledger control £720.
6. 2 100 + 450 − 300 = £2 250 in favour.
7. £450 credit.
8. Profit understated by £1 200; non-current assets understated by £1 200.
9. Any two: a bank payment posted to the wrong expense account; a cheque written and recorded at the wrong amount; any cash (not bank) transaction error.
10. A customer overpays, or returns goods already paid for.
11. Error of original entry; not revealed, because both sides use £2 900.
12. The credit side (it is then brought down on the debit side).

Where marks are usually lost

• Passing a commission or principle error through suspense.
• Correcting a complete reversal with the single amount instead of double.
• Writing the suspense balance on the wrong side.
• Omitting journal narratives where a question asks for them.
• Including the provision for doubtful debts or cash sales in a sales ledger control account.
• Netting off credit balances in the sales ledger against debit balances.
• Putting the bank statement balance, not the updated cash book balance, in the statement of financial position.
• Stating only the profit effect when the question asks for the statement of financial position effect as well.
• Calling a book of prime entry transposition “revealed by the trial balance”.

Next steps

Work through the practice questions under timed conditions, and use the free diagnostics to find any other topics that need work before Paper 1.

Official syllabus

AQA A-level Accounting (7127) specification, version 1.1, October 2026, A-level exams June 2019 onwards (AQA), section 3.4 Verification of accounting records.